THE  SHIP-SUBSIDY  BIEL. 


Ml'  I;  /.  I;  V 

SPEECH 

(II 


HON.  HMDS  N.  LITTAUER, 

OF  NEW  YORK, 

IN  THE 

HOUSE  OF  REPRESENTATIVES, 

Tuesday,  February  26, 1907. 


* 


7245 


WASHINGTON. 

1907. 


SPEECH 

OF 

HON.  LUCIUS  N.  LITTAUER. 


The  House  being  in  Committee  of  the  Whole  House  on  the  state  of 
the  Union  and  having  under  consideration  the  bill  (S.  529)  to  promote 
the  national  defense,  to  create  a  naval  reserve,  to  establish  American 
ocean  mail  lines  to  foreign  markets,  and  to  promote  commerce — 

Mr.  LITTAUER  said : 

Mr.  Chairman  :  The  deplorable  decay  and  humiliating  condi¬ 
tion  of  our  ocean  merchant  marine,  which  in  the  day  of  its 
glory  fifty  years  ago  ruled  the  seas,  but  which  to-day  is  prac¬ 
tically  driven  from  the  ocean,  has  engaged  the  attention  during 
the  last  decade  of  interested  and  patriotic  men  both  in  and  out  of 
Congress. 

Many  measures  proposing  to  rehabilitate  this  important  serv¬ 
ice  have  failed  of  enactment.  Early  in  the  first  session  of  this 
Congress,  carrying  out  in  greater  part  the  recommendations  of 
the  Merchant  Marine  Commission  established  by  Congress  in 
1904,  an  act  was  passed  by  the  Senate  whose  title  read,  “  to 
promote  the  national  defense,  to  create  a  naval  reserve,  to  es¬ 
tablish  American  ocean  mail  lines  to  foreign  markets,  and  to 
promote  commerce.”  That  act,  for  which  the  measure  now  be¬ 
fore  you  is  a  substitute,  had  three  main  provisions. 

First.  It  provided  for  a  general  ship  subsidy,  a  cargo  subsidy 
to  ships  engaged  in  carrying  freight  over  the  ocean,  and  to 
ships  engaged  in  deep-sea  fisheries — a  subsidy  based  upon  ton¬ 
nage,  which  by  some  was  thought  to  be  a  bonus  to  the  ships  in 
these  trades. 

Second.  It  provided  for  the  establishment  of  eleven  specified 
mail  routes  to  foreign  countries,  but  did  not  take  advantage  of 
our  recent  experience,  for  it  provided  for  those  routes  at  a  slow 
rate  of  speed  and  with  a  low  compensation. 

Third.  It  sought  to  create  a  naval  reserve  under  definite  pro¬ 
visions. 

No  subject  has  received  more  generally  favorable  assent  than 
the  necessity  for  the  upbuilding  of  our  merchant  marine  which, 
in  1855,  carried  over  75  per  cent  of  our  commerce  and  in  1905 
carried  12  per  cent.  The  withdrawal  of  mail  subsidies  J)y  our 
Government  in  1858  at  the  critical  time  in  the  change  in  ocean 
vessels  from  wooden  sail  ships  to  steam-propelled  iron  and  steel 
ships,  and  the  continued  increasing  subsidies  at  this  time  of 
foreign  governments,  especially  Great  Britain,  were  the  main 
causes  of  this  result. 

I  take  it  for  granted  that  no  man  within  the  sound  of  my 
voice  would  deny  the  desirability  to  the  interests  of  the  United 
States  to  build  up  our  ocean  merchant  marine  at  least  so  it 
might  be  on  a  par  with  the  other  industries  of  our  country. 

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Our  national  platforms  have  time  and  again  favored  the  en¬ 
acting  of  legislation  which  would  build  up  this  lost  trade. 

Mr.  SULZER.  Will  the  gentleman  yield  for  a  question? 

Mr.  LITTAUER.  Yes. 

Mr.  SULZER.  I  would  like  to  ask  the  gentleman  from  New 
York  when  the  Republican  party  in  a  national  platform  ever 
declared  in  favor  of  a  ship  subsidy  to  build  up  the  merchant 
marine? 

Mr.  LITTAUER.  I  am  speaking  of  a  mail  subsidy  in  its 
relating  to  building  up  the  merchant  marine.  I  do  not  care  to 
be  interrupted  at  this  time.  I  am  making  a  general  statement 
now,  and  if  the  gentleman  will  reserve  his  particular  questions 
until  a  later  time  I  shall  be  pleased  to  answer  him. 

Mr.  SULZER.  I  want  to  say  to  the  gentleman  that  no  Re¬ 
publican  national  platform  ever  advocated  ship  subsidies. 

Mr.  LITTAUER.  Our  national  platforms  have  repeatedly 
demanded  that  Congress  should  pass  measures  to  rehabilitate 
this  loss  of  trade.  Our  Presidents  have  in  messages  called  the 
attention  of  Congress  to  the  desirability  of  rehabilitating  our 
merchant  marine  not  only  from  the  standpoint  of  material 
profit,  but  from  its  broader  bearings  on  our  political  relations 
with  foreign  nations  and  from  its  particular  bearing  upon  our 
military  strength  at  sea. 

The  Senate  bill,  in  long  consideration  before  the  Committee  on 
the  Merchant  Marine  and  Fisheries,  seemed  impossible  of  favor¬ 
able  report.  There  was  early  disclosed  a  decided  opposition 
to  a  cargo  subsidy,  both  from  the  standpoint  of  utility  as  well 
as  propriety.  Many  amendments  and  limitations  to  the  Senate 
measure  were  offered,  including  tonnage  taxes  and  discriminat¬ 
ing  duties  impossible  of  enactment  without  the  abrogation  of  over 
thirty  treaties  with  foreign  countries.  Discriminating  duties, 
moreover,  have  in  modern  times  been  proved  unsatisfactory, 
notably  in  the  case  of  France,  and  have  been  dropped  wherever 
enacted  by  other  nations.  And  yet  there  were  two  projects  in 
the  Senate  bill  which  seemed  to  meet  with  approval  of  the  com¬ 
mittee,  as  well  as  of  Congress  in  general.  They  were  the 
projects  for  the  expansion  of  our  mail  service  and  the  creation 
of  a  naval  reserve. 

But  even  on  these  two  subjects  much  objection  was  heard 
and  strenuous  antagonism  raised  to  some  of  the  conditions  in 
the  Senate  bill.  It  was  my  part,  after  a  careful  study  of  the 
problem,  to  suggest  the  measure  that  is  now  before  you  for  con¬ 
sideration,  the  salient  features  of  which  are,  first  and  foremost, 
the  entire  and  utter  elimination  of  any  and  every  subsidy  to 
ships  based  on  cargo  carried.  There  is  not  a  single  provision 
in  this  bill  that  appropriates  a  dollar  fqr  a  general-cargo  sub¬ 
sidy.  Second,  the  selection  of  such  mail-carrying  routes  as 
would  appear  to  be  immediately  desirable  for  the  interests  of 
the  United  States  in  establishing  both  commercial  and  political 
relations  where  our  present  status  is  a  weak  one,  but  where 
our  possibilities  are  the  very  strongest.  In  doing  this  we  take 
heed  of  the  experience  had  under  existing  law,  under  the  mail- 
subsidy  act  of  1891,  by  providing  ample  and  proper  compensa¬ 
tion  that  would  make  it  possible  to  carry  out  the  purposes  for 
which  this  bill  is  proposed ;  in  which  regard  the  act  of  1891 
has  in  part  signally  failed. 

What  is  now  proposed  is  to  take  up  the  well-established  na- 
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tional  policy  of  mail  subsidy  where  it  has  proved  inadequate 
and  to  make  provision  such  as  would  surely  accomplish  the  pur¬ 
pose  of  rapid  mail  communication  with  South  America,  Austra¬ 
lia,  and  the  Orient,  in  ships  of  16  knots  speed,  faster  and  supe¬ 
rior  to  those  of  competing  nations  now  running  to  those  coun¬ 
tries  ;  the  ships  to  be  built  in  the  United  States  on  designs  to 
be  approved  by  the  Navy  Department,  with  a  view’  to  their  use 
as  naval  scouts,  auxiliary  cruisers,  and  transports,  to  be  held  at 
the  disposal  of  the  Government  in  time  of  war,  which  will  carry 
an  increased  proportion  of  American  citizens  in  their  crews  and 
a  number  of  American  boys  as  cadets. 

Mr.  SHERLEY.  Is  the  gentleman  aware  of  the  fact  that 
Admiral  Dewey,  in  the  report  made  to  the  House  and  Senate 
relative  to  the  speed  of  vessels  adaptable  for  scout  purposes, 
said  that  the  speed  should  be  at  least  20  knots? 

Mr.  LITTAUER.  Yes ;  and  how  does  that  affect  my  state¬ 
ment,  if  you  please? 

Mr.  SHERLEY.  The  gentleman  just  made  the  statement 
that  he  was  providing  for  ships  that  would  be  suitable  for  scout 
purposes. 

Mr.  LITTAUER.  Yes.  No  doubt  ships  of  20  or  24  or  even 
26  knots  would  be  better  than  those  of  16  knots.  Nevertheless, 
a  ship  running  16  knots  is  available  as  a  scout,  if  not  a  perfect 
one.  Again,  if  not  available  for  scout  purposes,  16-knot  ships 
are  faster  than  are  generally  run  to  the  countries  with  which 
we  seek  to  establish  mail  communication,  and  as  such  will  be 
more  available,  because  of  their  rapidity,  as  well  as  for  trans¬ 
ports  and  general  naval  auxiliaries.  Sixteen  knots  is  the  mini¬ 
mum  speed  provided  in  the  measure.  I  understand  there  is  to 
be  an  amendment  offered  here  that  will  authorize  the  Post¬ 
master-General  to  accept  the  bid  of  the  shipowner  who  will 
propose  to  cover  the  routes  in  the  most  rapid  fashion ;  at  any 
rate,  we  try  to  establish  a  16-knot  basis. 

We  retain  the  Senate  provision  for  the  creation  of  the  naval 
reserve,  specify  compensation  subject  to  annual  Congressional 
appropriation,  but  we  have  eliminated  from  the  Senate  proposi¬ 
tion  all  those  provisions  which  seem  to  point  toward  compulsion 
or  impressment  or  conscription  of  seamen,  which  the  sailors’ 
unions  and  labor  unions  complained  against  so  generally. 

The  bill  as  it  is  to-day  before  you  for  consideration  is,  as  I 
again  repeat,  in  no  way  a  ship-subsidy  bill.  It  has  not  a  single 
provision  to  give  a  dollar  to  cargo-carrying  vessels.  It  is  an 
ocean  mail  bill  pure  and  simple,  a  virtual  extension  of  existing 
law,  with  the  incidental  provision  for  the  establishment  of  a 
naval  reserve  to  be  voluntary  with  every  officer  and  seaman, 
whether  he  be  employed  in  the  coastwise,  lake,  or  foreign  service, 
while  it  is  optional  with  the  owners  of  the  American  ships  to 
carry  naval-reserve  men  or  not  or  in  any  proportion  that  they 
may  see  fit.  The  bill  proposes  an  expenditure  of  public  money 
not  as  a  bonus  or  gift,  but  as  compensation  for  specified  public 
service,  the  transportation  of  American  ocean  mails  by  Ameri¬ 
can  ocean  steamships  and  the  establishment  of  a  superior  ocean 
mail  service  to  those  countries  of  the  world  where  it  is  conceded 
our  present  service  is  inferior,  and  where  political  and  com¬ 
mercial  considerations  plainly  suggest  it  should  be  the  best. 
It  is  not  a  measure  to  benefit  existing  lines  or  prosperous  cor¬ 
porations. 

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It  provides  for  seven  lines  of  mail  communication,  each  one 
of  which  is  warranted  by  the  expenditure  proposed  in  order 
to  produce  the  results  desired,  for,  of  course,  inadequate  appro¬ 
priation  would  prove  as  ineffective  as  the  act  of  1891  proved  to 
these  countries,  bringing  no  results.  It  is  in  no  way  any  change 
in  the  policy  of  our  country,  a  policy  steadily  pursued  from 
1848  to  1858,  reenacted  in  the  postal-subsidy  act  of  1891  under 
a  Republican  Administration,  which  enactment  was  a  policy  not 
changed  in  a  single  condition  when  the  control  of  our  Federal 
legislative  and  executive  departments  followed  into  the  hands 
of  the  Democratic  party  under  Cleveland,  so  that  above  all  we 
have  a  right  to  appeal  to  both  sides  of  the  House  that  this  meas¬ 
ure  should  receive  consideration  on  the  merits  of  each  one  of 
its  projects,  the  general  policy  having  been  upheld  by  the  Dem¬ 
ocratic  as  well  as  the  Republican  party  when  each  was  in  full 
bontrol  of  the  Government.  We  are  to-day  paying  $1,400,000 
for  the  carrying  of  our  mails  over  six  routes  to  Europe,  the 
West  Indies,  Mexico,  Venezuela,  and  Australasia.  The  vessels 
which  carry  these  mails  are  the  most  modern  and  efficient  in 
our  ocean  fleet  of  to-day ;  in  fact,  they  constitute  a  large  part 
of  our  steam  tonnage  regularly  engaged  in  foreign  trade. 

Mr.  SULLIVAN.  Will  the  gentleman  yield  for  a  question? 

Mr.  LITTAUER.  Yes. 

Mr.  SULLIVAN.  Does  it  occur  to  the  gentleman  that  if  they 
had  brought  in  a  bill  lowering  the  duties  upon  South  American 
products,  and  at  the  same  time  providing  a  mail  subsidy  for 
ships  to  South  America,  that  then  you  would  have  a  compre¬ 
hensive  scheme  of  legislation  which  the  gentlemen  upon  the 
Democratic  side  would  be  glad  to  support? 

Mr.  LITTAUER.  My  belief  is  that  if  we  had  free  trade  with 
South  America  our  commerce  would  not  for  the  time  being  be 
much  increased  at  all. 

We  import  about  $75,000,000  from  Brazil,  largely  coffee  and 
rubber.  Now,  as  to  Argentina,  where  our  trade  affects  the  leather 
interests  of  the  country — the  shoemaking  interest  of  Massachu¬ 
setts — we  find  that  80  per  cent  of  all  the  hides  produced  in  Ar¬ 
gentina  come  now  to  the  United  States  under  duty.  Eighty  per 
cent  of  all  the  hides  produced  in  Argentina  reaches  us,  so  that 
all  we  could  increase  our  trade  in  hides  would  be  but  20  per  cent. 

Mr.  SULLIVAN..  The  gentleman  leaves  out  one  element,  and 
that  is  that  if  we  got  these  hides  free  from  duty  we  could  manu¬ 
facture  our  shoes  cheaper  and  sell  more  shoes  to  European  and 
Asiatic  countries  than  we  do  now. 

Mr.  LITTAUER.  We  might  manufacture  a  pair  of  shoes  2 
cents,  perhaps  3  cents,  a  pair  cheaper.  No  figures  have  ever 
been  presented  to  me  showing  any  more,  and  I  have  been 
brought  up  not  in  the  shoe  business,  but  in  the  leather  business. 
I  do  not  believe  that  the  duty  on  hides  makes  the  cost  or  has 
ever  made  the  cost  of  a  pair  of  shoes  2  cents  higher  than  if  the 
duty  was  entirely  removed  from  hides. 

Mr.  SULLIVAN.  I  want  to  inform  the  gentleman  that  3  cents 
in  the  price  of  a  pair  of  shoes  at  wholesale  is  such  an  element 
as  to  make  the  difference  between  success  and  failure  between 
persons  on  both  sides  of  the  line — that  is  to  say,  the  man  who  is 
manufacturing  at  3  cents  higher  than  the  other  loses  out  on 
account  of  that  small  item. 

Mr.  LITTAUER.  1  can  not  agree  at  all  with  the  statement, 
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and  I  do  not  believe  it  would  make  a  difference  in  the  exports 
of  a  hundred  pair  of  shoes  in  a  year,  and  I  think  I  have  as 
much  right  to  my  statement  as  the  gentleman  from  Massachu¬ 
setts  has  to  his. 

There  is  no  experiment  of  any  kind  connected  with  this  bill. 
It  is  founded  on  a  partially  successful  experience  of  our  own 
and  follows  in  the  exact  lines  of  the  eminently  successful  ex¬ 
perience  of  Great  Britain  for  over  sixty  years,  of  Germany, 
and  of  France,  and  of  Italy,  and  most  emphatically  in  late 
years  of  Japan.  Great  Britain  was  the  pioneer  in  this  policy 
of  mail  subsidy,  on  which  she  has  expended  $300,000,000.  Her 
stated  object  was  rapid,  frequent,  and  punctual  communication 
to  feed  the  main  arteries  of  her  commerce,  to  foster  maritime 
enterprise,  and  to  encourage  the  building  of  superior  vessels, 
which  would  promote  wealth  in  time  of  peace  and  be  a  defense 
in  time  of  war. 

Mr.  MARTIN.  If  the  gentleman  will  permit,  if  I  understand 
this  bill  and  report,  it  is  a  bill  for  purely  a  mail  subsidy. 

Mr.  LITTAUER.  Purely  so. 

Mr.  MARTIN.  Take  for  example  the  first  proposed  route 
provided  in  this  bill  between  American  ports  and  Brazil.  In 
what  manner  is  the  American  mail  to  Brazil  now  being  carried 
under’  our  postal  service?  v 

Mr.  LITTAUER.  I  will  say  via  Liverpool  and  Europe  to 
a  great  extent.  To-day  we  have  not  a  single  regular  and 
reliable  mail  connection  with  Brazil  or  that  coast  of  South 
America.  We  send  occasionally  mails  on  some  slow  ship,  neither 
regular  in  sailing  nor  rapid  nor  punctual,  but  often  the  regular 
way  of  sending  our  mail  to-day  is  via  Liverpool  and  Havre. 

Mr.  MARTIN.  I  notice  that  the  provision  requiring  a  sub¬ 
sidized  mail  route  to  Brazil  provides  no  limit  of  compensation 
for  a  monthly  service,  and - 

Mr.  LITTAUER.  If  the  gentleman  will’  excuse  me,  I  will 
reach  that  later,  because  I  wish  to  take  up  each  route  and  dis¬ 
cuss  it. 

Mr.  MARTIN.  I  desire  to  question  the  gentleman  when  he 
reaches  that  point. 

Mr.  LITTAUER.  Incidental  to  the  main  purpose  of  mail 
communication  arise  interests  of  the  utmost  moment  to  this 
country  in  the  conditions  existing  to-day.  To  carry  out  the 
provisions  submitted  to  you  will  promote  the  steel-ship  building 
industry,  will  promote  the  maintenance  of  shipyards  with  skilled 
workmen,  an  industry  as  much  a  part  of  the  national  defense 
in  its  ability  to  build  war  vessels  as  is  the  building  up  of  the 
Navy  itself.  Without  shipyards  we  can  have  no  ships,  and 
without  ships  we  can  have  no  naval  reserve,  again  as  essential 
to  the  Navy  as  the  National  Guard  of  our  States  is  in  relation 
to  the  Army.  Materials  for  the  building  of  ships  in  the  foreign 
service  are  by  the  Dingley  Act  free  of  duty,  but  bear  in  mind 
that  in  the  cost  of  a  ship  labor  plays  an  altogether  greater  part 
than  materials,  for  we  are  clearly  advised  that  60  per  cent 
of  the  total  cost  of  a  vessel  is  for  labor  in  assembling  the 
materials  at  the  shipyard,  while  of  the  balance  of  40  per  cent, 
30  per  cent  is  in  the  labor  expended  in  making  the  materials 
•ready  for  their  purposes.  It  is  the  high  rate  of  American  wages 
that  makes  shipbuilding  30  per  cent  dearer  in  the  United  States 
than  in  England,  while  the  cost  of  the  raw  materials  plays  but 
a  very  small  part,  indeed,  in  the  calculation. 

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Mr.  SHERLEY.  Will  the  gentleman  at  that  point  permit 
me?  Is  it  not  also  true  that  no  ship  built  of  foreign  material 
upon  which  duty  has  not  been  paid  can  be  used  in  the  coastwise 
trade  for  a  longer  period  than  two  months  in  any  one  year? 

Mr.  LITTAUER.  Why,  certainly ;  as  I  said  a  moment  ago, 
these  ships  have  to  ply  across  the  ocean. 

Mr.  SHERLEY.  Is  it  not  also  true  that  no  shipowner  is  will¬ 
ing  to  take  advantage  of  that  provision  when  it  prevents  his 
ship  from  being  put  into  the  coastwise  trade,  should  circum¬ 
stances  make  it  necessary? 

Mr.  LITTAUER.  I  do  not  think  so. 

Mr.  SHERLEY.  That  is  the  statement  of  Mr.  Arthur  Sewall. 
who  practically  tried  it. 

Mr.  LITTAUER.  I  would  not  second  it.  Now,  coming  back 
to  the  materials. 

Mr.  FOSS.  May  I  ask  the  gentleman  a  question?  I  want  to 
ask  the  gentleman  w  hether  or  not  he  has  any  opinion  from  the 
Navy  Department  as  to  the  provisions  in  this  bill  relating  to  the 
Naval  Reserve  feature? 

Mr.  LITTAUER.  Wre  have  had  a  great  number  of  letters  rec¬ 
ommending  them  all — practically  recommending  the  provisions 
of  the  Senate  bill.  We  have  eliminated,  in  connection  with  the 
Naval  Reserve,  all  the  provisions  that  look  toward  compulsion. 
To-day  the  compensation  is  specified,  the  conditions  are  speci¬ 
fied  ;  but  we  make  it  voluntary  for  any  sailor  or  officer  engaged 
in  the  lake,  coastwise,  or  foreign  service  to  join  the  Naval  Re¬ 
serve,  if  he  come  within  the  requirements,  and  to  accept  these 
emoluments,  as  he  may  choose.  Then  we  make  it  entirely  vol¬ 
untary  on  the  shipowner  to  have  in  his  crews  a  large  or  a  small 
percentage  or  number  of  sailors  belonging  to  the  reserve,  as  he 
may  choose. 

Mr.  FOSS.  May  I  ask  the  gentleman  whether  there  were  ever 
any  hearings  before ‘the  committee  on  this  particular  substitute 
relating  to  the  Naval  Reserve? 

Mr.  LITTAUER.  No  ;  there  were  none.  It  is  practically  the 
same  measure  that  has  been  thoroughly  discussed  and  approved 
by  the  Navy,  with  the  elimination  of  everything  that  we  felt 
was  subject  to  great  criticism,  but  we  wanted  to  eliminate  any¬ 
thing  that  might  look  toward  compulsion.  We  had  no  desire 
whatever  to  try  to  force  men  into  the  Naval  Reserve.  It  was  to 
be  a  voluntary  organization,  the  same  as  our  militia.  It  is 
nothing  but  a  fitting  school.  These  men,  if  they  belong  to  the 
three  marine  services — lake,  coastwise,  and  foreign — have  a 
right,  provided  they  are  American  citizens,  to  join  the  reserve 
under  such  regulations  as  the  Secretary  of  the  Navy  will  make. 
They  join  for  four  years.  They  receive,  according  to  their  sta¬ 
tion  and  their  ability  as  seamen,  certain  annual  retainers,  as  do 
the  British  naval  reserves.  That  compensation  has  to  be  pro¬ 
vided  for  each  year  by  Congressional  appropriation,  but  it  would 
appear  that  under  these  regulations  we  might  create  a  naval 
reserve  of  perhaps  2,000  men.  And  if  we  could,  and  could  train 
them  a  week  or  two  each  year,  the  small  expense  that  would  be 
involved  in  this  matter  would  not  be  worthy  of  serious  consid¬ 
eration. 

Now,  I  was  coming  to  the  point  in  the  consideration  of  the  * 
construction  of  ships  that  it  is  really  the  cost  of  labor,  the  rate 
of  American  wages,  that  makes  it  impossible  to  build  ships  here 
7245 


9 


in  competition  with  ships  built  in  foreign  countries.  We 
are  told  that  ships  in  our  country  cost  from  20  to  30  per  cent 
more  than  ships  built  in  foreign  yards.  Sixty  per  cent  of  the 
gross  cost  of  a  ship  is  labor ;  and,  then,  you  must  remember 
that  most  of  the  materials  when  they  reach  the  shipyard  have 
been  already  improved,  and  labor  is  here  again  the  greater  part 
of  the  cost.  It  is  the  high  rate  of  American  wages,  not  the  cost 
of  raw  materials,  that  has  to  do  with  our  inability  to  compete 
with  foreign  nations  in  the  building  of  ships. 

Mr.  SHERLEY.  Will  the  gentleman  yield? 

Mr.  LITTAUER.  Yes. 

Mr.  SHERLEY.  Is  it  not  true  that  upon  the  Great  Lakes 
they  are  building  ships  cheaper  than  they  are  building  them 
anywhere  in  the  world? 

Mr.  LITTAUER.  The  kind  of  ships  wre  build  on  the  Great 
Lakes  are  different  in  many  ways.  There  are  great  cargo-carry¬ 
ing  ships ;  enormous  carrying  ships,  in  a  certain  way ;  ships 
that  would  not  be  particularly  fitted  for  ocean  traffic,  fresh¬ 
water  steamers  which  in  many  particulars  are  cheaper  than 
steamers  for  salt-water  use. 

Mr.  SHERLEY.  I  appreciate  that,  but  they  are  ships  in 
which  the  labor  element  is  as  large  as  in  ships  that  are  fitted 
for  ocean  voyages. 

Mr.  LITTAUER.  And  without  any  foreign  competition  at 
all.  They  must  be  built  in  American  yards. 

The  policy  of  every  great  maritime  power  of  Europe  is  to  in¬ 
duce  the  building  of  its  mail  steamships  as  well  as  its  wrar  ves¬ 
sels  in  its  own  shipyards.  The  ships  which  will  be  built  in  the 
United  States,  if  this  bill  is  to  be  carried  into  effect,  will  result 
in  an  additional  fleet  of  from  twenty-seven  to  thirty  fast  steel 
merchant  steamers,  made  suitable,  in  accordance  with  the  pro¬ 
visions  of  the  bill,  for  auxiliary  purposes  in  times  of  war,  pre¬ 
cisely  similar  to  the  way  similar  fleets  are  called  into  existence, 
and  supported  in  precisely  the  same  manner  to  aid  the  navies 
of  England,  France,  Germany,  Russia,  Italy,  Spain,  and  japan. 

Germany  follows  the  “  free-ship  ”  policy  as  to  ordinary  steam¬ 
ers,  permitting  her  citizens  to  acquire  ships  wrhere  they  will ; 
but  Germany  stipulates  that  the  steamships  of  her  subsidized 
mail  lines  must  be  built  in  German  shipyards  and  as  far  as 
possible  of  German  materials.  The  “  free-ship  ”  argument  has 
no  basis,  on  precedent  of  other  countries,  in  connection  witfi 
subsidized  mail  lines.  There  are  on  the  seas,  in  foreign  trade, 
196  ships  of  16-knots  speed.  Of  19  no  definite  information  could 
be  had,  but  150  of  the  196  receive  subsidies,  w^hile  but  27  receive 
no  subsidy. 

Of  the  seven  projects  of  this  bill,  four  apply  to  the  countries 
south  of  us  in  the  American  Continent,  with  w’hom  we  have  a 
vital  political  and  commercial  interest,  and  three  to  the  Orient. 
The  Monroe  doctrine  impels  us,  in  the  furtherance  of  its  high¬ 
est  purpose,  to  cultivate  relations  of  political  and  commercial 
intimacy  with  the  governments  of  Central  and  South  America. 

Within  ten  years  w^e  have  acquired  in  the  Pacific  Ocean  the 
Hawaiian  Archipelago,  the  Philippine  Archipelago,  a  portion  of 
the  Samoan  group,  and  the  island  of  Guam.  We  have  under¬ 
taken  to  construct  at  enormous  cost  the  Panama  Canal.  All 
of  wrhich  acquisitions  and  undertakings  carry  writh  them  oppor¬ 
tunities  in  the  expansion  of  our  trade  in  South  America  and  in 
7245 


10 


the  Pacific.  It  is  in  these  two  directions  that  this  bill  seeks  to 
take  advantage  of  our  commercial  opportunities.  The  very  first 
step,  if  we  desire  new  foreign  markets,  must  be  rapid  mail  com¬ 
munication,  providing  amply,  at  the  same  time,  conveniences 
that  will  enable  the  buyers  and  sellers  of  these  countries  to 
come  to  us  rapidly  and  easily,  as  well  as  to  permit  ours  to  go 
to  them. 

Mail  communication  with  regularity  and  rapidity  of  service 
are  primary  and  imperative  needs  of  commerce,  just  as  com¬ 
merce  is  the  best  promoter  of  international  friendship.  The 
better  mail  facilities  provided,  the  greater  in  experience  has 
been  the  expansion  of  national  trade.  Experience  has  there¬ 
fore  compelled  nations,  without  regard  to  expense,  to  foster 
and  promote  progress  in  their  foreign  postal  service.  Rapidity 
and  regularity  are  the  essential  requirements.  Every  mer¬ 
chant  recognizes  that  the  approaches  to  a  market  must  be 
quick  and  convenient  and  regular ;  hence  the  imperative  de¬ 
mand  for  fast  and  frequent  mail  and  passenger  steamers  on 
all  the  ocean  highways  of  the  world.  All  nations  are  seeking 
to  transport  their  mails  under  their  own  flag.  No  agents  are 
equal  to  steamships  in  inducing  a  foreign  demand  for  the  prod¬ 
ucts  of  a  country. 

The  ocean  mail  service  of  the  United  States  has  proved  to 
be  a  source  of  great  profit.  The  superintendent  of  foreign 
mails  calls  attention  to  the  fact  that  in  the  fiscal  year  1906  the 
cost  of  ocean  mail  service  was  $2,965,624.21,  while  the  postage 
collected  on  articles  exchanged  with  foreign  countries,  leaving 
out  Canada  and  Mexico,  amounted  to  $6,008,807.53,  leaving  a  net 
profit  of  $3,043,183.32 — a  profit  of  $3,000,000  which  it  would  ap¬ 
pear  could  well  be  spent  in  the  development  of  our  ocean  mail 
service,  as  is  proposed  in  this  bill,  and  in  making  such  ocean 
mail  service  efficient. 

Every  dollar  of  these  $3,000,000  is  made  at  the  expense  of  the 
commerce  of  the  United  States.  The  profit  to-day,  or  rather 
during  the  year  1906,  was  $3,000,000,  but  this  profit,  as  the 
figures  show,  has  been  a  progressive  one.  During  the  last  four 
years,  from  1903  to  1906,  inclusive,  it  has  averaged  $2,567,830.45 
per  year,  while  in  the  four  preceding  years,  from  1899  to  1902, 
inclusive,  the  profit  amounted  to  but  $1,240,706.26  each  year. 
While  no  doubt  this  increase  of  100  per  cent  in  profit  arising 
from  the  carriage  of  ocean  mails  during  the  last  four  years,  in 
comparison  with  the  previous  four  years,  may,  in  part,  arise 
from  the  wonderful  expansion  of  trade  in  exports  and  imports 
during  this  period,  it  would  seem  that  we  would  have  a  right 
to  infer  that  this  increase  of  profit  would  continue  in  almost 
like  proportion,  and  especially  so  if  we  expend  these  profits  in 
the  development  of  the  trade  which  makes  them  an  incident.  It 
will  take  at  least  four  years  to  build  the  ships  required  to  take 
advantage  of  the  provisions  of  this  act.  If  the  same  ratio  of 
increase  in  the  profits  of  our  mail  service  continues,  we  will  at 
that  time  be  making  a  profit  of  $5,000,000  out  of  the  ocean- 
mail  service,  while  this  bill  calls  for  an  extreme  expenditure,  if 
every  opportunity  it  offers  is  taken  advantage  of,  of  $3,850,000. 

Mr.  SHERLEY.  Mr.  Chairman,  will  the  gentleman  tell  how 
much  was  charged  to  the  expenses  of  operating  the  mail  serv¬ 
ice,  for  the  operating  cost  of  the  post-office  system  of  America? 

Mr.  LITTAUER.  Will  the  gentleman  repeat  that  question, 
as  I  did  not  hear  the  last  of  it? 

7245 


11 


Mr.  SHERLEY.  Why,  the  proposition  is  simply  this :  How 
much  have  you  charged  against  the  receipts  from  the  foreign 
mail  service  to  the  cost  of  operating  the  postal  service  in  this 
country  ? 

Mr.  LITTAUER.  I  have  charged  whatever  the  cost  actu¬ 
ally  was.  The  cost  was  $2,965,624.21.  Now,  the  profits  on  that 
might  be  the  difference  between  these  figures  and  the  income 
that  the  United  States  has  had  from  postage  going  to  foreign 
countries — postage  based  upon  the  weight  of  packages  and  letters 
and  other  mail  carried. 

Mr.  SHERLEY.  If  the  gentleman  will  permit,  I  do  not 
believe  he  will  want  that  answer  to  stand.  Do  you  mean  to 
tell  the  committee  that  there  has  been  charged  against  the  re¬ 
ceipts  for  the  foreign  mail  service  any  of  the  expenses  incident 
to  the  post-office  service  in  America,  other  than  simply  the  pay¬ 
ment  of  the  steamship  companies? 

Mr.  LITTAUER.  The  carriage  across  the  seas  is  the  main 
expense  charged,  and  the  Superintendent  of  Foreign  Mails  ex¬ 
plains  particulars. 

Mr.  SHERLEY.  Does  the  gentleman  consider  it  fair  or  any¬ 
thing  but  a  trick  of  bookkeeping  to  talk  about  a  balance  in 
favor  of  the  ocean  trade  of  $3,000,000  or  more,  when  he  does  not 
charge  against  that  trade  any  of  the  expense  incident  to  the 
Post-Office  Department? 

Mr.  LITTAUER.  I  can  not  see  by  what  process  of  reasoning 
the  gentleman  wants  to  make  any  addition  to  the  cost  of  the 
carriage  across  the  ocean  in  relation  to  the  postal  revenue. 
We  have  received  it  because  these  mails  go  to  foreign  countries. 
The  income  figured  is  separate  from  the  domestic  cost.  If  we 
had  not  postal  communication  with  foreign  countries  we  would 
not  have  received  $6,000,000. 

Mr.  SHERLEY.  But  the  gentleman  must  realize  that  the 
cost  of  carrying  the  foreign  mail,  both  that  which  goes  out  and 
that  which  comes  in,  is  not  limited  simply  to  crossing  the  water. 

Mr.  LITTAUER.  True.  That  is  the  ocean  carriage.  Now, 
then,  it  is  the  carriage  of  a  letter  that  leaves  Washington  and 
goes  through  New  York  to  Liverpool  or  to  London,  and  the  do¬ 
mestic  charge,  the  charge  for  the  railway  mail  service  to  New 
York,  is  not  included. 

Mr.  SHERLEY.  But  is  not  that  an  expense  of  the  Post- 
Office  Department,  and  should  they  not  include  every  expense 
for  the  actual  carriage  of  the  mail  on  land  as  well  as  on  the 
water  ? 

Mr.  LITTAUER.  Let  us  put  it  on  that  basis,  and  let  me 
begin  my  argument,  and  my  argument  is  that  it  cost  for  the 
foreign  carriage  over  $6,000,000  last  year,  and  we  made  out  of 
this  carriage  across  the  ocean  not  less  than  $3,000,000. 

The  volume  of  the  ocean  mails  of  the  United  States  is  proved 
to  be  practically  the  same  as  the  ocean  mails  of  Great  Britain. 
To  carry  these  mails  the  United  States  spends  $3,000,000  out 
of  the  $6,000,000  she  receives  for  the  carriage  of  same,  while 
Great  Britain  spends  $6,000,000  subsidizing  her  fleet  of  high¬ 
speed  ocean  steamers  to  all  parts  of  the  world,  supporting  and 
training  of  her  naval  reserves.  We  spend  $3,000,000  on  an 
inferior  mail  service,  conducted  chiefly  by  foreign  steamers. 
Great  Britain  spends  $6,000,000  on  a  superb  ocean  mail  fleet, 
suitable  for  war  purposes,  manned  by  navad  reserves,  every 
ship  contributing  to  her  naval  and  commercial  power. 

7245 


12 


Mr.  PRINCE.  On  page  19  of  the  bill,  section  3,  you  pro¬ 
vide  for  the  Naval  Reserve,  providing  for  officers,  petty  officers 
and  men,  limiting  the  number  to  not  to  exceed  10,000,  and  speci¬ 
fying  the  pay  that  each  shall  receive.  Have  you  figured  out 
what  would  be  the  average  pay  of  each  of  these  10,000  men 
who  may  be  regarded  as  a  part  of  the  Naval  Reserve? 

Mr.  LITTAUER.  I  have  not.  And  I  do  not  believe  we  can. 
It  would  be  simply  an  estimate  that  anyone  might  make,  from 
any  standpoint,  but  without  any  reasoning  from  experience. 
Membership  in  the  Naval  Reserve  would  be  entirely  voluntary. 
How  do  we  know  whether  it  is  going  to  be  a  taking  proposition 
or  not?  The  unions  may  be  against  it. 

Mr.  PRINCE.  I  am  assuming  that  we  are  passing  a  working 
bill,  and  that  it  will  go  into  effect  and  meet  with  the  approval 
of  the  people,  and  that  10,000  men  will  be  added  to  the  Naval 
Reserve  of  the  United  States. 

Mr.  LITTAUER.  That  is  the  utmost  limit  that  might  be 
added. 

Mr.  PRINCE.  I  find  here  for  each  officer  of  the  line,  refer¬ 
ring  now  to  page  20,  the  highest  officer  receives  $110  a  year  and 
the  lowest  receives  $24  a  year,  so  I  suppose  we  may  properly 
make  an  average  of  $50  or  $60. 

Mr.  LITTAUER.  Oh,  no ;  the  seamen  far  outnumber  the 
officers.  The  number  of  officers  of  high  rank  to  whom  $110 
per  year  would  be  paid  would  be  very  few,  and  if  the  gentle¬ 
man  will  read  the  section  carefully  he  will  see  that  the  pay¬ 
ment  of  these  sums  is  dependent  upon  annual  appropriations 
by  Congress  and  the  submission  of  estimates.  So  I  take  it 
for  granted  that  after  this  bill  becomes  a  law  a  further  appro¬ 
priation  will  have  to  be  made  to  cover  the  expenses  of  the 
Naval  Reserve,  and  until  such  appropriation  is  made  the  pro¬ 
vision  in  regard  to  the  reserve  can  not  go  into  operation. 

Mr.  PRINCE.  We  are  now  proceeding  to  make  a  contract 
which  will  last  for  ten  years,  and  we  are  to  pay  so  much  for 
the  transportation  of  the  mails,  and  we  are  likely  to  add  10,000 
men  to  the  Naval  Reserve  by  virtue  of  this,  who,  in  addition  to 
the  $3,700,000,  are  also  to  be  paid  out  of  the  Treasury.  Will 
the  gentleman  be  kind  enough  to  state  whether  you  are  not 
helping  to  pay  the  seamen  who  go  upon  these  vessels,  and  to 
that  extent  making  an  additional  gift  to  the  shipowners  by  re¬ 
ducing  the  pay  that  they  would  have  to  give  to  the  men  by  the 
amount  that  the  Government  will  pay? 

Mr.  LITTAUER.  I  do  not  believe  that  result  will  at  all  come 
about.  I  do  not  believe  the  compensation  offered  in  this  bill  is 
going  to  lead  to  the  establishment  of  a  naval  reserve  of  10,000 
or  even  of  2,000.  The  best  authorities  have  told  me  that  the 
Naval  Reserve  need  not  be  expected  to  be  any  considerable 
number  at  any  early  date.  We  will  gain  by  experience,  and 
perhaps  will  be  able  to  amend  the  law,  but  in  no  way  will  it 
act  as  a  sort  of  bonus  to  shipowners. 

Mr.  FOWLER.  You  mean  to  the  shipowners? 

Mr.  LITTAUER.  It  will  not  be  a  bonus  to  the  shipowners 
through  a  gratuity  toward  the  wages  of  the  sailors. 

This  bill  provides  for  a  monthly  service  over  its  specified 
routes  at  one-half  the  compensation  given  for  a  fortnightly 
service.  The  monthly  service  would  give  twelve  communica¬ 
tions  a  year,  and  the  fortnightly  service  would  give  twenty- 
7245 


13 


six.  The  subsidy  is  not  increased  in  proportion,  because  the 
number  of  ships  required  for  a  fortnightly  service  being  greater 
than  the  number  required  for  a  monthly  service  could  be  built 
for  less  money. 

As  to  the  rates  of  compensation  in  this  bill,  I  would  state 
that  they  have  been  the  subject  of  most  careful  study,  and  prac¬ 
tically  represent  10  per  cent  on  the  first  cost  of  ships  that  will 
be  necessary  to  conduct  the  service.  This  percentage  is  prac¬ 
tically  the  same  as  the  English  Government  is  giving  the  Cunard 
Line  for  the  building  of  the  two  enormous  steamers  now  under 
way  to  keep  her  mail  service  with  New  York  ahead  of  that  of 
her  competitors.  She  believes  that  it  is  so  much  to  the  advan¬ 
tage  of  her  trade  to  lead  in  this  service,  already  so  fully  estab¬ 
lished,  that  she  made  a  loan  of  $13,000,000,  which  she  supple¬ 
ments  with  the  guaranty  for  mail  and  admiralty  subsidy  to  the 
company,  because  of  these  two  steamers  in  an  actual  aggre¬ 
gate  of  $1,210,500  a  year  for  the  next  twenty  years,  or  a  little 
less  than  10  per  cent  on  the  loan  made. 

Mr.  STAFFORD.  I  want  to  ask  the  gentleman  from  New 
York  this  question.  He  was  discussing  the  total  expenditure 
that  Great  Britain  makes  for  its  mail  subsidy  as  compared  with 
that  proposed  by  this  bill.  Has  the  gentleman  any  data  com¬ 
paring  the  total  mileage  covered  under  the  Great  Britain  sub¬ 
sidy  with  that  proposed  in  this  bill? 

Mr.  LITTAUER.  I  have  not.  I  do  not  believe  that  Great 
Britain’s  subsidy  is  given  by  mileage,  although  I  do  remember 
that  the  subsidy  from  Great  Britain  to  South  Africa  is  based 
upon  substantially  the  same  figures  and  the  same  percentage 
as  the  subsidy  here  proposed  from  the  Atlantic  coast  to  Buenos 
Ayres. 

Mr.  STAFFORD.  Does  the  gentleman  know  whether  she 
pays  the  same  rate  of  subsidies  for  all  mail  service? 

Mr.  LITTAUER.  Oh,  no ;  it  depends  altogether  upon  the 
conditions  of  trade.  She  seeks  to  help  where  help  is  needed, 
and  gives  much  greater  subsidies  in  some  directions  than  she 
does  in  others,  the  same  as  we  do  in  this  bill. 

Mr.  STAFFORD.  Under  the  present  law  the  compensation 
is  the  same  only  it  varies  according  to  mileage? 

Mr.  LITTAUER.  Mileage  and  speed  alone,  but  that  is  not 
so  in  the  provisions  of  this  bill. 

Mr.  STAFFORD.  It  is  as  far  as  the  speed  is  concerned. 

Mr.  LITTAUER.  Yes ;  but  when  you  go  to  miles  it  is  a  dif¬ 
ferent  matter.  I  am  going  to  comment  on  that  very  subject. 

Now,  the  subsidies  in  this  bill  are  based  as  near  as  possible 
on  10  per  cent  of  the  first  cost  of  the  ships  necessary  to  carry 
them  out. 

Mr.  SHERLEY.  Will  the  gentleman  allow  me  a  question 
right  there? 

Mr.  LITTAUER.  Certainly. 

Mr.  SHERLEY.  Was  there  any  testimony  of  any  kind  before 
the  committee  relative  to  what  the  cost  of  the  ships  would  be 
according  to  the  terms  of  this  bill? 

Mr.  LITTAUER.  The  committee  did  not  enter  upon  that  sub¬ 
ject. 

Mr.  SHERLEY.  Was  there  any  data  before  the  committee 
showing  what  the  size  of  the  ships  would  be  under  the  terms 
of  this  bill? 

7245 


14 


Mr.  LITTAUER.  No ;  nor  could  there  be. 

Mr.  SHERLEY.  Was  there  any  as  to  the  cost  of  maintain¬ 
ing  such  a  ship  or  its  probable  earning  capacity,  or  any  other 
detailed  statement  by  which  we  could  gather  how  much  was 
necessary  in  order  to  give  the  shipowner  a  reasonable  profit? 

Mr.  LITTAUER.  No ;  but  we  do  know  that  if  we  want  to 
make  a  service  successful,  if  we  want  to  make  up  in  the  ship- 
subsidy  legislation  where  our  failures  have  been  in  the  past 
and  where  lines  have  not  been  extended,  we  know  that  we  have 
got  to  follow  in  the  footsteps  of  other  nations  that  have  been 
successful.  Now,  the  gentleman  could  ask  a  thousand  questions 
on  that  line,  hut  I  would  like  to  make  my  statement,  and  then 
I  will  answer  his  questions  if  I  can. 

[The  time  of  Mr.  Littauer  having  expired,  he  was  yielded 
fifteen  minutes  more  by  the  gentleman  from  Ohio,  Mr.  Grosve- 
nor]. 

Mr.  LITTAUER.  Would  it  not  be  well  for  the  United  States 
to  pattern  after  the  action  of  the  great  maritime  nation  of  Great 
Britain,  25  per  cent  only  of  whose  foreign-going  steamships  are 
engaged  in  the  carrying  trade  to  and  from  the  United  States 
and  in  carrying  50  per  cent  of  all  that  is  shipped  out  of  and  into 
the  United  States  over  the  ocean? 

Compare  her  liberality  with  the  results  of  our  own  mail 
subsidy  between  New  York  and  Europe,  where  under  the  act  of 
1891  there  was  paid  on  our  contract  last  year  $762,638,  while 
if  we  had  paid  for  the  weight  of  the  mails  carried  under  this 
subsidy  contract  at  our  regular  statutory  rate  this  line  would 
have  been  entitled  to  $910,542,  so  that  the  Government  saved 
nearly  $150,000  on  the  most  decried  contract  in  existence  under 
the  mail-subsidy  act  of  1891.  Through  the  provisions  of  that 
act,  paying  subsidy  of  $4  per  mile  to  a  line  already  in  existence, 
we  last  year  saved  the  Government  $150,000,  and  besides  that 
had  the  steamships  of  the  line  available  for  Government  pur¬ 
poses  in  times  of  war  should  there  have  been  a  repetition  of 
the  necessity  for  their  use  as  there  was  in  the  Spanish  war, 
when  without  the  Yale  and  Harvard  and  others  of  this  line  we 
would  have  had  to  pay  enormous  prices  for  whatever  ships  we 
might  have  had  to  use  as  scouts  and  transports  for  the  Army 
in  that  war. 

Mr.  MARTIN.  Will  the  gentleman  yield  for  a  question? 

Mr.  LITTAUER.  Yes. 

Mr.  MARTIN.  Does  the  act  of  1891,  under  which  the  so- 
called  “  subsidy  contracts  ”  are  made,  authorize  the  Postmaster- 
General  to  make  similar  contracts  between  American  ports  and 
South  American  ports? 

Mr.  LITTAUER.  Anywhere;  provided  they  come  up  to  the 
conditions ;  the  rate  is  dependent  upon  the  mileage. 

Mr.  MARTIN.  Why  is  it  that  contracts  with  other  countries 
have  not  been  entered  into? 

Mr.  LITTAUER.  Because  the  rates  are  inadequate. 

Mr.  KAHN.  Will  the  gentleman  yield  for  a  question? 

Mr.  LITTAUER.  Yes. 

Mr.  KAHN.  The  Oceanic  Steamship  Company  is  operating 
a  line  from  San  Francisco  to  Australia  under  existing  law,  and 
has  an  indebtedness  now  of - 

Mr.  LITTAUER.  It  is  losing  money  every  year. 

Mr.  KAHN.  Of  over  $2,000,000.  Its  stock  is  down  to  about 
7245 


15 


$2  a  share  and  its  bonds  are  down  to  $60  or  $65.  It  has  de¬ 
faulted  in  its  interest,  simply  because  it  has  tried  to  live  up  to 
its  contract. 

Mr.  LITTAUER.  Yes ;  and  yet  its  ships  are  among  the  most 
modern  built  of  ships ;  and  if  we  were  to  have  any  trouble  in 
the  Pacific,  they  would  be  demanded  and  be  most  necessary  for 
the  purposes  of  the  National  Government. 

Mr.  KAHN.  They  make  16  knots  right  along. 

Mr.  LITTAUER.  Yes ;  16  knots.  They  will  come  in  under 
this  bill,  and  I  will  explain  their  status  in  a  moment. 

Mr.  MARTIN.  Approximately,  how  much  of  an  increase  of 
sibsidy,  by  any  proportion  that  the  gentleman  can  give  us,  would 
this  new  bill  provide  for? 

Mr.  LITTAUER.  Double. 

Mr.  MARTIN.  As  compared  with  the  other. 

Mr.  LITTAUER.  Yes ;  this  new  bill  provides  for  16-knot 
ships.  Under  the  old  law  the  subsidy  is  $2,  and  under  this 
proposed  bill  it  will  be  at'least  $4  and  over. 

Mr.  MARTIN.  The  compensation  would  be  about  double? 

Mr.  LITTAUER.  Yes ;  and  must  necessarily  be  so.  I  will 
explain  that  when  I  get  to  the  routes. 

Mr.  SHERLEY.  Was  not  that  the  basis  of  pay  that  would 
have  been  paid  if  this  mail  had  not  been  carried  by  American 
subsidized  routes,  the  one-sixty  rate? 

Mr.  LITTAUER.  It  unquestionably  was  the  rate  that  applied 
to  American  ships. 

Mr.  SHERLEY.  Is  it  not  true  that  the  same  mail  could  have 
been  carried,  and  other  mail  was  being  carried,  at  44  cents? 

Mr.  LITTAUER.  By  subsidized  foreign  line  ships. 

Mr.  SHERLEY.  We  are  paying  only  44  cents. 

Mr.  LITTAUER.  We  were  paying  44  cents  to  foreign  subsi¬ 
dized  lines,  but  under  the  laws  of  the  land  as  they  stand  to¬ 
day,  had  the  American  Line,  like  the  Pacific  Mail,  refused  to 
accept  the  terms  of  the  subsidy  it  would  have  received  $910,000 
for  what  under  the  subsidy  act  it  received  $752,000.  If  you  want 
to  consider  some  other  set  of  circumstances,  if  her  ships  had  be¬ 
longed  to  foreigners,  and  had  been  subsidized  by  England,  we 
would  have  had  a  different  rate  for  such  ships  than  we  have 
for  our  own ;  but  under  and  according  to  the  laws  of  the  land, 
without  any  change,  if  this  subsidy  contract  had  not  been  in 
existence,  that  line  would  have  received  $150,000  more  than  it 
did  under  the  subsidy  for  carrying  the  same  mails. 

Mr.  SHERLEY.  And  if  the  contract  had  not  been  in  exist¬ 
ence  and  the  mail  had  been  given  to  a  foreign  line,  the  Govern¬ 
ment  would  have  saved  a  considerable  sum.  Is  not  that  true? 

Mr.  LITTAUER.  The  Government  pays  to  foreign  lines  one 
rate  for  the  carriage  of  mails.  It  pays  to  the  American  lines 
another  rate.  The  point  of  my  argument  is  that  this  contract 
has  been  decried  by  gentlemen  like  the  gentleman  from  Ken¬ 
tucky  [Mr.  Sherley],  but  that  it  has  resulted  in  a  profit  to  the 
United  States. 

Mr.  SHERLEY.  Assuming  we  would  have  to  carry  it  at  the 
one-sixty  rate. 

Mr.  LITTAUER.  Assuming  we  would  have  to  do  the  work 
as  we  did  it,  but  the  mails  were  carried  by  the  American  Line, 
and  we  have  made  this  profit  of  $150,000. 

Mr.  STAFFORD.  That  is  the  only  case  where  the  pay  would 
have  been  in  excess? 

7245 


16 


Mr.  LITTAUER.  Yes. 

Mr.  STAFFORD.  Because  of  the  density  of  traffic. 

Mr.  LITTAUER.  Yes ;  and  that  is  the  only  case  where  the 
Government  pays  $4  a  mile,  because  it  is  the  only  line  in  which 
we  have  20-knots  ships. 

Mr.  MARTIN.  I  want  to  ask  the  gentleman  another  ques¬ 
tion.  It  seems  to  me  that  the  gentleman  is  right  now  upon 
the  point  I  was  seeking  to  get  some  information  upon  before, 
and  that  is  this :  What,  approximately,  is  the  cost  of  the  present 
service  we  are  now  obtaining,  the  present  mail  service,  say,  to 
Brazil,  for  example? 

Mr.  LITTAUER.  Oh,  that  I  do  not  recall ;  but  it  is  all  set 
forth  in  the  report  of  the  superintendent  of  foreign  mails. 

Mr.  MARTIN.  How  does  that  compare  with  the  cost  of  the 
service  that  is  proposed  under  this  new  legislation? 

Mr.  LITTAUER.  Oh,  I  could  not  give  you  that  figure.  I  do 
not  know  how  our  mails  go.  Our  mails  go  in  part  in  one  way 
and  in  part  in  another.  They  are  sent  to  Europe,  and  if  the 
steamers  go  from  Liverpool  at  an  earlier  date  to  Rio  de  Janeiro 
and  Buenos  Ayres,  they  are  sent  from  Liverpool ;  if  not,  they 
are  dispatched  from  Havre  or  from  Hamburg. 

Mr.  MARTIN.  We  have  no  mail  contracts  for  carrying  them? 

Mr.  LITTAUER.  None  whatever. 

Mr.  GAINES  of  Tennessee.  Will  the  gentleman  yield  for  a 
question? 

Mr.  LITTAUER.  Yes. 

Mr.  GAINES  of  Tennessee.  Will  the  gentleman,  before  he 
concludes,  tell  the  committee  what  has  been  the  history,  whether 
financially  successful  or  not,  with  the  lines  that  we  have  sub¬ 
sidized  heretofore — the  Roach  and  the  Collins  lines,  and  the 
other  firms — and  what  the  difference  is  between  the  bills  they 
were  subsidized  under  and  the  present  one? 

Mr.  GROSVENOR.  The  gentleman  will  find  all  that  in  the 
Record  in  the  morning  in  the  extension  of  my  speech. 

Mr.  GAINES  of  Tennessee.  The  gentleman  is  so  capable  of 
telling  the  House  everything  that  it  may  desire  to  know  that  I 
would  like  to  have  it. 

Mr.  LITTAUER.  Now,  I  want  to  try  to  get  along  and  make 
my  few  points  if  I  am  able  to  do  so.  The  French  Government  is 
acting  just  like  the  English  Government.  The  French  Govern¬ 
ment  has  a  contract  with  the  great  French  line,  the  Compagnie 
Gen§rale  Transatlantique.  It  pays  that  company  $1,289,000 
of  subvention  from  Havre  to  New  York.  That  same  company 
runs  ships  to  the  West  Indies,  and  that  line  is  subsidized  at  the 
rate  of  $939,524  for  carrying  mail  communication  there.  This 
whole  bill  is  based  on  the  experience  of  nations  which  have  been 
successful  in  fostering  their  commerce,  successful  in  developing 
their  merchant  marine,  which  followed  the  establishment  of 
subsidized  mail  lines. 

Now,  we  propose  in  this  bill  seven  routes.  The  first  one  runs 
from  a  point  on  the  Atlantic  coast  to  Rio  Janeiro.  The  subsidy 
proposed  is  $600,000,  which  would  be  for  twenty-six  departures 
each  year,  which  would  give  an  average  of  $23,077  for  each 
voyage  and  would  pay  to  the  line  about  $4.62  for  each  mile  of 
travel.  Route  No.  2,  which  extends  again  from  a  seaport 
on  the  Atlantic  coast  to  Montevideo  and  Buenos  Ayres  would 
traverse  a  journey  a  thousand  miles  longer,  6,000  miles.  The 
7245 


17 

subsidy  for  fortnightly  service  is  $800,000,  or  $33,077  per  voyage, 
$5.01  per  mile. 

Mr.  WILSON.  Mr.  Chairman - 

The  CHAIRMAN.  Does  the  gentleman  from  New  York 
yield? 

Mr.  LITTAUER.  Yes. 

Mr.  WILSON.  I  was  going  to  ask  you  one  question.  That 
is  not  the  information  you  gave  us  the  day  when  this  bill  was 
reported,  and  I  was  going  to  ask  you  where  you  got  this  infor¬ 
mation,  and  where  you  got  the  information  based  on - 

Mr.  LITTAUER.  Will  the  gentleman  state  in  what  regard 
this  is  not  the  same  information? 

Mr.  WILSON.  I  understand  the  amount  of  subsidy  per  trip 
and  per  mile - 

Mr.  LITTAUER.  I  think  the  gentleman  is  mistaken.  I 
think  these  are  the  identical  figures  for  fortnightly  services  I 
presented  before,  the  ones  which  I  have  just  stated,  but  will  ask 
the  gentleman  to  point  any  figures  which  are  not  the  same. 

Mr.  WILSON.  In  the  first  you  said  the  amount  per  trip 
would  be  $25,000. 

Mr.  LITTAUER.  My  dear  sir,  if  you  will  kindly  divide  26 
into  $600,000,  you  get  the  result  that  will  give  you  the  correct 
figure  I  gave,  and  if  you  divide  12  into  $300,000  you  will  get 
$25,000. 

Mr.  WILSON.  I  asked  where  you  got  the  information  we 
did  not  have  before. 

Mr.  LITTAUER.  I  got  it  by  dividing  26  into  $600,000, 
$23,071,  and  then  I  divided  the  total  amount  of  the  trip  by  5,000 
miles  to  get  the  rate  per  mile.  On  the  route  to  Buenos  Ayres, 
$800,000  subsidy,  6,000  miles,  the  rate  is  higher  than  the  rate 
to  Brazil.  Why?  Because  our  trade  with  Brazil  is  but  a 
small  one  in  exports  and  a  large  one  in  imports.  Ships  will 
always  be  able  to  get  a  large  cargo  on  a  return  voyage  from 
Brazil,  while  our  trade  with  Argentina  and  Uruguay  is  a  larger 
one  in  export,  and  will  probably  grow  to  be  still  larger  in  ex¬ 
ports  than  imports. 

Mr.  McNARY.  Mr.  Chairman - 

The  CHAIRMAN.  Does  the  gentleman  from  New  York  yield 
to  the  gentleman  from  Massachusetts? 

Mr.  LITTAUER.  I  do. 

Mr.  McNARY.  I  would  like  to  ask  the  gentleman,  if  he  has 
finished  upon  that  particular  point - 

Mr.  LITTAUER.  I  have  not. 

Mr.  McNARY.  I  meant  on  the  trade  we  get — why  it  is  that 
the  committee  has  reported  as  regards  the  Pacific  coast  ports 
that  the  line  shall  go  north  of  Cape  Mendocino - 

Mr.  LITTAUER.  I  am  coming  to  that  in  a  moment. 

Mr.  McNARY.  Just  a  question — and  why  is  it  that  on  the 
Atlantic  coast  the  provision  is  that  practically  all  lines  go 
from  New  York? 

Mr.  LITTAUER.  The  gentleman's  statement  is  absolutely 
incorrect  so  far  as  New  York  is  concerned.  The  Postmaster- 
General,  if  this  bill  should  become  a  law,  would  ask  for  bids. 
Bids  might  be  received  from  New  York,  Portland,  Boston,  Balti¬ 
more,  or  wherever  anyone  was  willing  to  enter  into  the  condi¬ 
tions  of  the  contract.  There  is  nothing  whatever  in  the  bill 
which  requires  these  lines  to  start  from  New  York,  but  it  is 
7245 - 2 


18 


probable  they  would,  because  New  York  happens  to  be  the  great 
export  and  import  center  of  the  country. 

Mr.  McNARY.  Then,  Mr.  Chairman,  in  order  to  make  that 
point  clear,  as  long  as  it  is  provided  in  the  Pacific  coast  division 
that  a  line  shall  go - 

Mr.  LITTAUER.  I  will  come  to  that  by  and  by. 

Mr.  McNARY.  Wait  a  moment.  Will  the  gentleman  agree 
to  an  amendment  for  the  committee  providing  a  line  shall  go 
from  certain  points,  dividing  the  Atlantic  coast  up  the  same  as 
the  Pacific  coast? 

Mr.  LITTAUER.  If  the  gentleman  will  give  me  as  good  a 
reason  why  it  should  be  done  on  the  Atlantic  coast  as  I  can 
give  him  why  it  should  be  done  on  the'  Pacific  coast,  I  will 
accept  the  amendment. 

Mr.  McNARY.  I  think  I  can. 

Mr.  LITTAUER.  Will  the  gentleman  support  the  bill  if  I 
will  do  it? 

Mr.  McNARY.  With  several  other  amendments,  I  will  be  de¬ 
lighted  to  do  it. 

Mr.  KAHN.  Will  the  gentleman  yield  to  me  just  for  a  mo¬ 
ment? 

Mr.  LITTAUER.  I  want  to  go  on.  We  sell  the  Argentine 
$16,000,000  worth  of  our  manufactures.  We  buy  from  her 
to-day  only  $8,000,000  worth.  Her  exports  are  wool,  $50,000,000 ; 
wheat,  $51,000,000;  corn,  $33,000,000;  'linseed,  $21,000,000; 
cattle  and  meat,  $14,000,000,  none  of  which  can  expect  to  find  a 
market  in  this  country,  while,  as  I  said  before,  of  the  one 
product,  hides,  we  are  now  importing  80  per  cent  of  all  she 
produces.  The  capital  city  of  the  Argentine  is  Buenos  Ayres, 
with  a  million  people.  The  foreign  trade  of  the  country  is 
$500,000,000,  though  the  population  is  only  6,000,000 — a  greater 
foreign  trade  than  has  China,  with  300,000,000  people,  or  Japan, 
with  nearly  40,000,000  people.  There  will  be  required  to  estab¬ 
lish  the  route  to  Rio  de  Janeiro,  Brazil,  fortnightly  service,  five 
steamers,  and  these  five  steamers  will  cost  about  $6,000*000, 
exactly  ten  times  the  subsidy  proposed,  10  per  cent  on  the  first 
cost  of  ships. 

The  CHAIRMAN.  The  time  of  the  gentleman  has  expired. 

Mr.  SHERLEY.  Mr.  Chairman,  I  have  taken  a  good  deal  of 
the  gentleman’s  time,  and  I  am  perfectly  willing  to  yield  him 
five  minutes  to  be  taken  from  my  time. 

Mr.  GROSVENOR.  Mr.  Chairman,  let  me  make  a  statement. 
I  will  yield  fifteen  minutes  more  to  the  gentleman  from  New 
York,  and  state,  in  my  opinion,  that  the  gentleman  controlling 
the  time  on  the  other  side  will  recommend  with  myself  that 
debate  shall  be  extended  longer  than  the  five  hours,  so  that  we 
can  give  everybody  a  better  chance  to  debate. 

The  CHAIRMAN.  The  Chair  understands  the  gentleman 
from  Ohio  [Mr.  Grosvenor]  to  yield  fifteen  minutes  to  the  gen¬ 
tleman  from  New  York? 

Mr.  GROSVENOR.  I  do. 

The  CHAIRMAN.  The  gentleman  from  New  York  [Mr.  Lit- 
tauer]  is  recognized  in  the  time  of  the  gentleman  from  Ohio 
[Mr.  Grosvenor]. 

Mr.  LITTAUER.  Gentlemen,  I  believe  if  you  will  permit 
me  to  finish  my  statement,  I  will  answer  a  good  many  of  the 
questions  you  are  bombarding  me  with  from  time  to  time.  I 
7245 


19 


have  finished  now  with  the  consideration  of  the  routes  on  the 
eastern  coast  of  the  United  States.  I  will  next  proceed  with 
the  r6ute  on  the  Pacific.  The  route  is  from  the  west  coast  of 
the  United  States  to  the  west  coast  of  South  America,  Callao, 
and  Valparaiso,  a  distance  of  6,000  miles,  equal  in  length  to 
the  route  to  Argentina.  But  the  subsidy  on  the  west  coast  is 
$600,000,  while  on  the  east  coast  it  is  $800,000.  Why?  Because 
the  16-knot  ship  that  will  run  over  this  route  will  have  busi¬ 
ness  at  Panama,  and  that  business  will  aid  so  materially  that 
the  subsidy  need  not  be  as  great. 

Now,  to-day  the  Pacific  Mail  Steamship  Company  runs  over 
this  route  from  San  Francisco  to  Panama,  but  no  American 
ship  runs  south  of  Panama.  The  Pacific  Mail  Steamship  Com¬ 
pany  over  this  route  has  nothing  but  slow  steamers.  She  could 
not  use  a  single  steamer  that  she  now  possesses  with  which  to 
establish  this  mail  communication.  She  would  have  to  build 
new  steamers,  just  as  any  others  who  might  care  to  enter  that 
trade.  Not  a  single  American  steamship  runs  to-day,  regularly 
or  expeditiously  or  any  other  way,  from  the  Atlantic  or  the 
Pacific  coasts  of  the  United  States  to  the  ports  specified  in 
these  three  routes.  The  Secretary  of  State,  after  his  notable 
trip  to  the  east  and  west  coasts  of  South  America,  lays  particu¬ 
lar  stress  upon  the  desirability  of  more  intimate  trade  relations 
with  South  America,  and  he  declares  that  above  all  the  most 
effective  means  of  promoting  such  relations  is  the  establishment 
of  improved  steamship  communication  between  the  continents, 
for  modern  commerce  demands  regularity  and  rapidity  in  mail 
communication,  as  well  as  comfortable,  regular,  and  quick  passen¬ 
ger  transit  for  those  who  desire  to  trade  with  one  another.  The 
Pan-American  Congress  has  at  each  meeting  declared  the  de¬ 
sirability  of  better  steamship  communication  between  the  Amer¬ 
ican  countries. 

The  congress  held  last  August  favored  definite  contracts  with 
mail  navigation  lines,  to  connect  the  principal  ports  of  the 
American  countries,  to  be  established  by  joint  action  of  the 
countries  affected.  Peru  voted  this  year  an  annual  subsidy  of 
$150,000  for  fifteen  years  to  improve  her  steamship  communica¬ 
tion  with  the  Isthmus  of  Panama,  in  order  to  bring  her  closer 
to  our  Atlantic  and  European  ports.  The  Chilean  budget  this 
year  contains  an  appropriation  of  $95,000  for  substantially  the 
same  purpose,  while  on  the  east  coast  the  Argentine  Republic 
has  under  consideration  a  monthly  subsidy  of  $25,000  for  a 
fast  mail  line  to  improve  her  communication  with  Europe. 
Showing  conclusively  that  these  countries  are  ready  to  cooperate 
generously  in  providing  a  fast  mail  service. 

Now,  on  the  Atlantic  coast  we  have  line  No.  3,  which  will 
run  from  a  port  on  the  Gulf  of  Mexico  to  Panama.  Here  is 
one  exception  to  the  general  rule.  AVe  provide  here  for  boats 
of  only  14-knot  speed.  We  provide  for  a  weekly  boat.  We 
leave  out  the  monthly  service  and  provide  for  a  fortnightly  or 
weekly  service  at  an  altogether  lower  rate  of  compensation,  be¬ 
cause  the  business  does  not  require  it,  and  the  line  can  be  es¬ 
tablished  without  high  compensation.  The  purpose  of  this  line 
is  to  permit  the  commerce  of  the  Mississippi  Valley  to  get  into 
close  communication,  not  only  with  Panama,  where  our  great 
expenditure  is  now  taking  place,  but  through  Panama  to  the 
west  coast  of  South  America. 

7245 


20 


When  we  turn  to  the  mail  subsidies  in  the  Pacific  Ocean, 
wherein  this  bill  proposes  to  increase  the  present  subsidy  of 
$300,000  by  an  addition  of  $1,600,000  in  order  to  establish  regu¬ 
lar  communication  with  China,  Japan,  and  the  Philippines  at 
a  total  utmost  cost  of  $1,900,000,  we  find  that  the  British  Gov¬ 
ernment  is  paying  for  her  mail  lines  to  these  countries,  to  Asia 
and  Australia,  $1,700,000  to  the  Peninsular  and  Oriental  Steam¬ 
ship  Company,  and  in  addition  $300,000  to  the  Canadian  Pacific 
Company,  making  a  total  subvention  for  this  service  on  the 
Pacific  Ocean  of  $2,000,000.  The  German  Government,  for  its 
service  to  Asia  and  Australia,  pays  the  North  German  Lloyd 
Company  5,590,000  marks,  or  $1,320,000;  the  French  Govern¬ 
ment  pays  the  Messageries  Maritime  Steamship  Company,  for 
its  service  to  Asia  and  Australia,  $1,756,870.  These  foreign 
lines  have  been  subsidized  for  many  years  and  are  well  estab¬ 
lished,  so  that  in  view  of  the  higher  cost  of  construction  of 
our  ships  as  well  as  of  their  operation  our  proposed  expendi¬ 
ture  of  $1,900,000,  against  expenditures  of  $2,000,000  by  Great 
Britain  and  $1,750,000  by  France  and  $1,320,000  by  Germany,  is 
not  extravagant,  but  is  quite  on  a  par  with  those  foreign  sub¬ 
ventions.  Bear  in  mind  that  these  routes  will  give  us  weekly 
steamers  to  Manila,  Chinese  and  Japanese  ports  as  well  as  to 
Hawaii,  and  service  at  least  once  in  three  weeks  to  Samoa  and 
Australia, 

The  proposal  in  route  No.  5,  running  from  San  Francisco 
to  Hawaii,  Japan,  China,  and  the  Philippines,  is  for  a  fort¬ 
nightly  service,  at  a  compensation  of  $700,000.  This  is  the 
Pacific  Mail  Steamship  route  as  far  as  China,  which  line  is 
run  in  connection  with  what  is  known  as  the  Harriman  system 
of  railroads  which  concentrate  at  San  Francisco  as  terminal 
for  freights  for  the  Orient,  drawn  from  all  that  part  of  the 
country  south,  let  us  say,  of  New  York,  Chicago,  and  Omaha, 
including  the  entire  south  and  southwest  sections  of  the 
United  States,  as  well  as  the  southern  part  of  the  Middle  West. 

The  Pacific  Mail  Steamship  line  is  a  necessary  adjunct  to 
the  great  systems  of  transcontinental  railways  known  as  “  the 
Harriman  lines,”  and,  no  doubt,  will  continue  to  run  for  freight 
purposes  whether  mail  subsidies  are  granted  or  not,  but  will 
be  run  in  the  future,  as  it  has  been  in  the  past,  as  an  adjunct 
to  this  railroad  system  and  not  particularly  to  increase  the  mail 
facilities  with  the  Orient  or  to  build  up  ships  as  an  auxiliary 
to  the  Navy,  or  to  build  up  a  naval  reserve. 

This  steamship  company  has  been  in  existence  since  before 
the  act  of  1891  became  a  law,  when  her  ships  were  of  the  slow 
class.  Then  she  bid  for  and  obtained  a  contract  under  the 
act  of  1891,  at  the  rate  of  $1  per  mile,  but  abandoned  it  after 
a  few  voyages,  in  less  than  two  years,  as  unprofitable,  because 
of  the  requirements  of  the  law.  She  has  placed  since  in  her 
service  five  rapid-running  steamships,  each  one  of  which  would 
be  available  for  compensation  under  this  bill,  just  as  they  are 
now  available  at  the  $2  rate  provided  by  the  act  of  1891  for 
such  service.  At  least,  during  the  last  five  years,  if  the  Pacific 
Mail  Steamship  Company  had  taken  advantage  of  the  sub¬ 
sidies  now  provided  by  law,  she  could  have  received  $480,000 
per  annum,  but  she  has  constantly  refused  to  do  so. 

She  was  paid  for  such  mails  as  she  transported  this  past 
year  about  $82,000,  thus  forfeiting  the  opportunity  of  obtaining 
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an  additional  $400,000  simply  because  she  was  unwilling  to  meet 
the  requirements  of  the  postal-subsidy  act.  Now,  in  the  bill  be¬ 
fore  you  we  propose  to  offer  a  line  running  over  the  route  that 
her  ships  partially  run  $700,000,  but  the  conditions  now  im¬ 
posed  are  even  much  greater  than  the  conditions  of  the  old  act. 
The  regulations  as  to  the  nationality  of  seamen,  payment  of 
same,  and  the  regulations  as  to  the  regularity  of  sailing  are 
the  same,  because  of  which  she  refused  to  take  advantage  of 
the  subsidy  now  provided  by  law.  To  them  we  have  added  that 
her  ships,  which  but  occasionally  extend  their  journeys  beyond 
Hongkong,  must  on  each  and  every  trip  continue  to  the  port 
of  Manila,  an  additional  journey  of  628  miles  each  Way,  or 
1,256  miles  for  the  round  trip,  of  great  advantage  to  the  United 
States  in  quick  and  regular  communication  for  mail  and  trans¬ 
portation  of  merchandise  and  Army  supplies.  We  offer  as  an 
inducement  an  increase  of  $220,000  per  year  over  the  subsidy 
which  she  might  have  earned  under  existing  law. 

I  doubt  whether  this  subsidy  will  ever  be  taken  advantage  of 
by  the  Pacific  Mail,  but  I  believe  it  is  justified  from  every  point 
of  consideration  and  desirable,  even  if  accepted  by  the  Pacific 
Mail.  Those  who  raise  the  old  cry  and  point  to  this  line  as 
“  the  nigger  in  the  wood  pile  ”  have  given  little  study  to  the 
experience  of  the  past  and  the  considerations  I  have  briefly 
alluded  to,  but  simply  follow  the  easiest  line  of  criticism. 

If  the  Pacific  Mail,  Harriman’s  lines,  should  accept  the  sub¬ 
sidy,  it  would  mean  the  building  of  at  least  one  and  probably 
two  16-knot  ships,  together  with  regular  communication  be¬ 
tween  San  Francisco  and  our  military  garrisons,  naval  fleets, 
and  markets  in  the  Philippines,  and  above  all  the  displacement 
on  those  five  ships  already  in  commission  on  this  line,  as  well 
as  the  new  ones  that  would  have  to  be  built,  of  the  Chinese  and 
Japanese  sailors,  and  the  engagement  in  their  stead  of  Amer¬ 
ican  sailors  at  American  wages. 

I  doubt  whether  the  Pacific  Mail,  because  of  this  addition  of 
less  than  $300,000,  will  ever  take  advantage  of  the  subsidy  we 
now  offer.  Her  ships  are  run  in  connection  with  a  system  of 
railroads.  They  do  not  want  regular  dates  of  sailing  fixed  by 
the  Post-Office  Department,  as  this  law  would  require.  They 
want  to  run  whenever  their  cargo  permits  them  to  run ;  and  I 
believe  if  they  did  run  under  this  act,  if  they  did  come  under  its 
provisions,  we  would  be  justified,  and  that  the  United  States 
would  receive  a  good  return  for  the  proposed  subsidy. 

Mr.  DENBY.  I  beg  the  gentleman’s  pardon  for  interrupting 
him,  and  will  be  as  brief  as  possible.  I  should  like  to  ask  the 
gentleman  whether  he  has  any  comparison  showing  the  cost  of 
maintenance? 

Mr.  LITTAUER.  I  will  come  to  that  in  a  moment.  If  the 
Pacific  Mail  should  take  advantage  of  this  subsidy  she  will 
have  to  build  two  ships  of  16-knot  speed  and  will  have  to  make 
regular  sailings.  All  their  ships  will  have  to  come  under  the 
regulation  as  to  sailors — that  is,  one-quarter  of  the  sailors  must 
be  American  citizens  within  two  years,  one-tliird  within  three 
years  thereafter,  and  after  five  years  one-half.  What  does 
that  mean?  That  means  that  as  the  white  man  will  not  work 
with  the  Chinese  or  Japanese  cooly,  she  must  reform  her  en¬ 
tire  crews  and  have  them  all  white  men  and  citizens. 

Mr.  KAHN.  I  should  like  to  suggest  in  that  very  connec- 
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tion  that  this  line  is  in  direct  competition  with  a  Japanese 
line  which  employs  all  cheap  cooly  laborers,  and  also  in  direct 
competition  with  an  English  line  which  employs  that  kind  oiS 
labor. 

Mr.  LITTAUER.  In  connection  with  that  I  will  show  the 
difference  in  the  wages  and  in  the  cost  of  running. 

The  next  route  is  the  one  referred  to  by  the  gentleman  from 
Massachusetts,  specifically  stated  to  start  from  some  port  of  the 
United  States  north  of  Cape  Mendocino,  which  means  Puget 
Sound. 

Route  No.  6  extends  from  Puget  Sound  to  Japan,  China,  and 
the  Philippines.  No  single  American  ship  now  traverses  this 
route,  which  could  be  used  under  the  conditions  proposed.  It 
is  true  that  Puget  Sound  is  the  terminal  of  the  Great  Northern 
and  Northern  Pacific  Railways  and  that  a  line  thence  to  the 
Orient  is  necessary  as  an  outlet  and  inlet  for  freight  destined 
to  and  from  Asia.  Mr.  James  J.  Hill,  who  controls  these  sys¬ 
tems  of  railways,  could,  like  every  other  American,  take  advan¬ 
tage  of  this  subsidy  if  he  met  its  requirements,  but  he  does  not 
own  a  single  vessel  to-day  that  could  possibly  be  used  for  the 
purposes  of  this  bill.  He,  or  anyone  else,  who  took  advantage  of 
this  subsidy,  would  be  compelled  to  build  at  least  six  16-knot 
ships  which  would,  because  of  the  great  length  of  the  route,  have 
to  be  ships  of  the  largest  carrying  capacity — of  at  least  10,000 
tons  burden.  The  ships  to-day  known  as  “  the  Hill  ships,”  sail¬ 
ing  from  Puget  Sound,  never  go  beyond  China.  They  have  no 
communication  with  Manila. 

The  CHAIRMAN.  The  time  of  the  gentleman  has  expired. 

Mr.  LITTAUER.  I  should  like  five  minutes  more. 

Mr.  SHERLEY.  I  will  now  yield  to  the  gentleman  that  same 
five  minutes. 

The  CHAIRMAN.  The  gentleman  from  New  York  is  recog¬ 
nized  for  five  minutes. 

Mr.  LITTAUER.  Now,  gentlemen,  from  Puget  Sound  to  the 
Orient,  to  Japan,  China,  and  on  to  Manila,  there  does  to-day 
sail  an  American  line — the  Boston  Steamship  Line.  The  ships 
of  this  line  again  could  not  become  available  under  this  subsidy 
because  of  their  slow  speed,  but  this  line  has  now  been  driven 
out  of  existence  in  spite  of  the  fact  that  it  has  the  quartermas¬ 
ter’s  contract  with  Manila,  but  runs  without  subsidy,  because 
the  Japanese  are  subsidizing  their  lines  to  such  an  extent  as  to 
make  us  realize  plainly  that  Japan  wants  the  supremacy  of  the 
trade  in  the  Pacific ;  and  this  Boston  line  is  now  practically  out 
of  existence. 

Mr.  HUMPHREY  of  Washington.  Three  out  of  the  five  steam¬ 
ers  have  quit  within  the  last  thirty  days. 

Mr.  LITTAUER.  Now  we  come  to  the  Oceanic  Steamship 
Company,  which  runs  to  Hawaii,  which  runs  to  Samoa,  and  to 
New  Zealand,  and  over  to  Sydney.  This  line  has  16-knot  ships, 
and  she  has  three  vessels  now  running.  The  subsidy  which 
they  receive  is  based  on  the  act  of  1891  of  $2  a  mile,  which 
amounts  in  round  figures  to  $280,000,  and  the  provisions  of  this 
act  arbitrarily  gives  them  $200,000  in  addition  to  the  subsidies 
which  they  now  receive.  The  officials  of  the  line,  as  the  gentle¬ 
man  from  California  has  stated  a  few  days  ago,  show  that 
their  balance  sheet  is  a  horribly  bad  one ;  they  say  that  they  are 
losing  something  like  $373,000  a  year.  We  felt  that  if  we  gave 
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them  $200,000  toward  that  the  line  would  be  able  to  continue, 
because  of  the  beautiful  and  fair  prospects  that  there  are  in 
developing  the  trade  there ;  and  to  show  you  what  this  trade  is 
between  the  United  States  and  Australasia  I  will  say  that 
from  1896  up  to  1900  the  imports  were  $20,000,000  and  the  ex¬ 
ports  were  $79,000,000. 

From  1900  to  1904,  since  this  line  has  been  in  existence,  our 
imports  increased  from  $20,000,000  to  $24,000,000,  and  to-day 
are  $29,000,000,  while  the  exports  increased  from  $79,000,000 
to  $118,750,000.  Surely,  a  trade  that  can  make  such  a  showing 
when  in  its  infancy  is  worth  preserving.  It  has  been  won,  in 
part,  through  the  Oceanic  Line,  and  gives  promise  of  still  greater 
increase.  In  order  to  maintain  mail  ships  on  the  Pacific  Ocean 
in  accordance  with  our  American  ideas  and  requirements,  as  de¬ 
manded  by  our  statutes,  a  greater  subsidy  must  necessarily  be 
given.  The  requirement  that  a  necessary  percentage  of  Ameri¬ 
can  citizens  must-  form  part  of  the  crews  of  our  mail-subsidized 
steamers  prevents  the  employment  of  Chinese  seamen  or  stokers 
or  the  employment  of  lascar  crews.  The  Oceanic  Line  pays  in 
wages  $235,440  a  year.  If  the  same  crews  were  put  on  a  basis 
of  the  Canadian- Australian  Line  the  wages  would  amount  to 
$176,690.  If  they  were  put  on  the  basis  of  the  Peninsular-Orien¬ 
tal  Line,  with  lascar  crews,  they  would  amount  to  only  $123,404, 
and  if  paid  on  the  basis  of  the  Japanese  Line  they  would  amount 
to  but  $97,908. 

The  wages  paid  on  our  American  lines  are  practically  a  little 
more  than  double  what  are  paid  on  the  English  lines  with 
lascar  crews ;  two  and  a  half  times  what  is  paid  on  the  com¬ 
peting  Japanese  line.  The  average  wage  per  month  on  the 
Oceanic  Line  S.  S.  Sonora  is  $41.65,  while  on  the  British  line 
S.  S.  Orizaba  it  is  about  $17,  and  on  tbe  Japanese  line  S.  S. 
America  Marti,  $13.95.  In  addition  to  the  cost  of  labor  must 
be  added  the  price  of  fuel,  which  on  the  Pacific  Ocean  far 
exceeds  the  cost  on  the  Atlantic.  There  is  a  practical  and 
additional  reason  for  the  desirability  for  retaining  the  ships  of 
this  Oceanic  Line  as  auxiliaries  to  our  Navy.  If  we  compare 
the  cost  of  this  subsidy  with  the  cost  of  maintenance  of  like 
ships  among  our  cruisers,  we  will  find  that  three  of  these  cruis¬ 
ers — the  Buffalo,  the  Yankee,  and  the  Prairie — are  practically; 
the  same  size  as  the  three  ships  of  the  Oceanic  Line,  and,  with 
one-half  the  horsepower,  cost  us  to  maintain  in  1904  over  a 
million  dollars — three  times  the  amount  of  subsidy  given  to 
the  Oceanic  Line,  carrying  the  mails  and  developing  the  trade 
of  the  United  States.  And  it  is  on  these  grounds  that  we  be¬ 
lieve  that  we  are  justified  in  increasing  the  mail  subvention  to 
this  Oceanic  Line,  which  receives  but  $20,000  per  voyage — a 
lower  subvention  than  is  given  by  either  British,  Japanese,  Ger¬ 
man,  or  French  lines  competing  with  it,  the  German  line  re¬ 
ceiving  $41,000  a  voyage  and  the  French  line  $47,000,  in  com¬ 
parison  with  the  $20,000  now  paid  and  the  $30,000  per  voyage 
we  propose  to  pay. 

The  gentleman  from  Michigan  [Mr.  Fordney]  called  atten¬ 
tion  yesterday  to  the  fact  that  the  subsidy  to  the  Oceanic  Line 
was  $280,000,  while  she  paid  in  wages  but  $235,000.  That  is 
true,  but  compare  these  figures  with  those  of  the  British  Pen¬ 
insular  and  Oriental  Line,  whose  subsidy  is  for  all  her  services 
£353,873,  equal  to  $1,769,365,  while  her  total  expenditure  for 
7245 


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officers  and  crews  is  but  £315,262,  equal  to  $1,576,310.  So  this 
British  line  is  also  subsidized  in  greater  amount  than  her  pay 
roll.  There  can  be  no  proper  comparison  between  •  pay  roll 
and  subsidy. 

The  fullest  development  of  our  domestic  commerce  proceeds 
at  a  rate  so  rapid  that  we  outstrip  all  records ;  we  have  pro¬ 
gressed  beyond  the  development  of  our  railways  and  are  the 
marvel  of  mankind.  Our  lands  are  covered  with  farms,  the 
chimneys  of  our  factories  dot  the  land,  a  network  of  railways 
connects  all.  Our  production  demands  that  we  turn  our  en¬ 
deavors  more  and  more  each  year  to  commercial  expansion  in 
trade  across  the  seas.  It  already  requires  five  and  one-half  mil¬ 
lion  tons  of  shipping  to  handle  the  eighteen  hundred  million  dol¬ 
lars  of  exports  and  thirteen  hundred  million  dollars  of  imports, 
at  a  cost  for  ocean  carriage  of  two  hundred  millions  of  dollars, 
of  which  ships  flying  the  Stars  and  Stripes  carry  but  12  per  cent. 

Our  shipbuilders,  our  sailors,  and  our  merchants  will  again 
prove  that  they  excel  those  of  other  nations  in  ingenuity  and 
enterprise,  as  they  did  so  auspiciously  in  the  first  half  of  the 
last  century,  if  the  Government  but  gives  them  proper  protec¬ 
tion.  Great  Britain  with  mail  subsidies  stood  by  her  shipping 
and  shipowners,  with  results  that  have  added  to  her  wealth,  her 
strength,  and  her  preeminence  among  nations. 

The  United  States  expends  at  least  $100,000,000  each  year  on 
its  Navy.  We  will  spend  $400,000,000  in  building  the  Panama 
Canal.  Can  we  not,  therefore,  afford  to  devote  five  millions 
each  year  for  carrying  foreign  mails,  to  the  encouragement  of 
our  shipping?  If  we  do  not  do  so,  we  will  soon  realize  that  the 
four  hundred  millions  spent  on  the  Panama  Canal  will  act  as 
subsidy  to  the  trade  of  foreign  ships  only. 

Our  exports  and  imports  now  afford  employment  to  foreign 
vessels.  Our  Post-Office  Department  expends  the  funds  of 
the  United  States  in  payment  to  vessels  of  foreign  nations 
which  are  available  as  auxiliaries  to  foreign  navies,  whose 
officers  and  seamen  are  being  educated  at  our  expense  as  a 
naval  reserve  for  our  rivals  and  possible  enemies,  while  our 
Government  is  lacking  in  similar  resources  essential  to  our 
national  defense.  In  this  way  our  commerce  is  in  reality  an 
enormous  subsidy  to  the  sea  power  of  foreign  nations,  building 
up  the  sea  power  of  foreigners  at  the  cost  of  our  own.  An 
aroused  patriotic  sentiment,  favored  by  economic  conditions, 
demands  that  the  United  States  delay  no  longer  in  reviving 
her. merchant  marine  through  mail  subsidies,  which  have  in  the 
experience  of  all  nations  proved  successful. 

I  appeal  to  each  one  of  you  not  to  permit  local  or  partisan 
consideration  to  influence  your  vote  when  the  defense  of  the 
nation,  the  preservation  of  its  power,  and  the  prosperity  of  its 
people  are  at  stake. 

7245 


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